Appendix A - Recommended delivery model

Assurance provision

  • Newly created non-profit
  • Private insurance companies

Regulation of builders

  • Newly created administrative authority

Rule making

  • Government

Adjudication of homeowner disputes

  • Independent adjudicator

Appendix B - Recommend dispute resolution for warranty protections

Step 1 - Issue identification

  1. Homeowner identifies issue and submits claim to the warranty provider
  2. Warranty provider contacts the builder regarding the claim
  3. Builder inspects the issue and determines whether and/or how they will resolve the issue

Step 2 - Internal dispute resolution

  1. If homeowner is dissatisfied with the builder's response, they homeowner can submit a request to the warranty provider for a review of the claim
  2. Warranty provider conducts an assessment and makes a decision of warrantability

Step 3 - Adjudication

  1. If homeowner disagrees with the warranty provider's decision, he/she can appeal to an independent third party adjudicator
  2. Independent adjudicator reviews the decision and determines whether to accept, reject, or amend the decision
  3. Independent adjudicator issues decision

Appendix C – Consolidated list of recommendations

Delivery of warranty protection for new homes

  1. New home warranty protection should be delivered through a competitive model
  2. Minimum standards for mandatory warranty protections should be set out in legislation
  3. Warranty protection should be treated as an insurance product with oversight by the insurance sector regulator
  4. A new not-for-profit corporation should be established to assume responsibility for existing enrolments and be permitted to participate in the competitive model

Regulation of builders and vendors

  1. A separate entity should regulate builders and vendors
  2. The regulator entity for builders and vendors should be structured as an administrative authority
  3. The new regulator should be subject to accountability, transparency and oversight requirements that align with provisions in place for similar administrative authorities
  4. The legislation should articulate the purpose of builder and vendor regulation to be protecting consumers and promoting high quality new home construction
  5. The legislation should include minimum requirements for registration as a new home builder or vendor
  6. Appeals of registration related decisions should continue to be to the Licence Appeal Tribunal
  7. The legislation should provide for an enhanced compliance and enforcement framework for the regulator
  8. All new applicants for registration as a builder should be required to meet minimum technical competencies
  9. Employees of builder registrants carrying out key functions and responsibilities of the builder such as site managers and those officers, directors, senior executives and partners as are stipulated in regulation, should be required to meet minimum technical competencies
  10. There should be mandatory continuing education requirements for all registrants and other individuals required to meet technical competencies
  11. A code of ethics should be established for builders and vendors
  12. The current builder directory should be enhanced to improve the accessibility and transparency of information that is available on the directory
  13. The regulator should adopt a proactive approach to sector outreach
  14. The board of the new regulator should continue to have strong builder expertise

Dispute resolution and adjudication

  1. Where homeowners disagree with a decision of a warranty provider they should have access to neutral and independent adjudication delivered by a body separate from the warranty provider
  2. There should continue to be a process for a court to review an adjudicator’s decision
  3. Homeowners should continue to have a right to sue
  4. Each warranty provider should be required to have an internal dispute resolution process in place to facilitate the resolution of disputes between new home owners and builders and an internal review process for its decisions
  5. The adjudicator should be empowered to use a range of hearing options from paper hearings, telephone conference hearings and technology based hearings such as online, through to in-person hearings or a combination of these processes
  6. Costs of an adjudication should be set by the adjudicator with limited power to award costs against the homeowner in exceptional circumstances only
  7. The onus on the homeowner in advancing a warranty claim should be clearly articulated in the legislation and provide that the onus on the homeowner is to establish the credible symptoms of a defect and not the cause of a defect
  8. Warranty providers should be required to clearly communicate their policy on use of experts in evaluating claims and an adjudicator should be permitted to engage an expert with responsibility for the cost of the expert determined by the adjudicator
  9. The rules of procedure that apply to an adjudication hearing should be structured to support an accessible, affordable and timely process, with attention to the needs of self-represented homeowners

Rule-making and standards setting

  1. Government should have final approval of rule-making on warranty protection and standards for builder and vendor registration
  2. Government, in collaboration with affected parties, should establish more robust, transparent, inclusive and regular processes for reviewing warranty rules and standards for builder and vendor registration
  3. Government should establish a more robust, transparent, inclusive and regular process for reviewing the Construction Performance Guidelines and consider incorporating the Guidelines into regulation

Consumer education

  1. The regulator, warranty providers, and independent adjudication entity should be required to provide consumer education
  2. Consumer education should be accessible and delivered in a variety of formats including paper, electronic, online and in person and efforts made to engage more directly with consumers, particularly condominium boards
  3. The regulator and warranty providers should actively engage with other parties who can support their consumer education responsibilities

Other matters

  1. An immediate review should be initiated to consider the adequacy of current deposit protection rules
  2. All new homes should have warranty coverage even if owner built and intended for personal occupation
  3. Key definitions and terms that have been problematic over the years should be clarified, including the definitions of builder and vender, what constitutes a home for warranty coverage purposes and what is meant by “previously occupied”
  4. A review of the condominium specific provisions of warranty coverage, including timelines for submitting claims, should be undertaken to ensure they adequately address the complexities of condominium ownership and the shared responsibilities of unit owners and the condominium corporation

Appendix D – Written submissions from organizations

Note to reader: I received many helpful submissions from individuals and organizations. For privacy reasons the following list is limited to submissions from organizations.

Adjudicate.ca

AirGenuity Inc.

Aviva Canada

Bowser Technical Inc.

Burstein & Greenglass LLP

C3PX Engineering Limited

Canadian Condominium Institute

Canadians for Properly Built Homes (including change.org material)

Canlight Management Inc.

Consumers Council of Canada

Degagne Carpentry

DelZotto, Zorzi LLP

Echelon Insurance

E&H Property Management

First Canadian Title Insurance Company

Frendel Kitchens Limited

Gibson Kennedy & Company

Hellyer Engineering Limited

J.L.C. Group

Lio & Associates

Michael J. Murphy Management

Municipality of Centre Hastings

Nelligan O’Brien Payne LLP

Ontario Building Officials Association

Ontario Home Builders’ Association

Ontario Real Estate Association

Progressive Home Warranty Ltd.

Residential Construction Council of Ontario

Shibley Righton LLP

Tarion Warranty Corporation

Tarion Warranty Corporation, Ombudsperson

Tarion Warranty Corporation, Consumer Advisory Council

Westmount Guarantee Services Inc.

Appendix E – Glossary

Administrative authority

In Ontario, administrative authorities (AAs) are not-for-profit corporations that operate at arm’s length from the government. These self-funded entities assume financial, operational, and legal responsibility for administering legislation, which includes delivering day-to-day delegated services such as registration or licensing, inspection, enforcement, and fee setting. AAs are governed by independent boards of directors and are self-financed from fees collected from regulated professionals and businesses.

Some administrative authorities are responsible for administering a compensation fund. Consumers can file a claim with the AA to receive compensation from the fund.

The government oversees AAs and is responsible for the legislation and regulations that are administered and enforced by the AAs.

By-laws of Tarion

Section 23 of the Ontario New Home Warranties Plan Act provides that the Corporation delegated to administer the warranty program (in this case Tarion) may make by-laws on a range of topics including what homes are covered by warranty and the extent and duration of the warranty. These by-laws are deemed to be regulations and have the same force and effect as regulations made by government.

Builder

A person who undertakes the performance of all the work and supply of all the materials necessary to construct a completed home (or a project in relation to a residential condominium conversion project), whether for the purpose of sale by the person or under a contract with a vendor or owner.

Chargeable conciliation (see also conciliation below)

A consequence to the builder if Tarion decides that a conciliation inspection could have been avoided had the builder honoured his/her warranty obligations within the builder repair period and if there is no exception to chargeability as outlined in Builder Bulletin 20 under Exceptions to Chargeability.

Common elements

Common elements are the parts of a condominium property that are not part of a unit. Unit owners share in the ownership of the common elements. Common elements can include things like hallways, elevators, fitness facilities, roofs, heating systems and grounds.

Conciliation

A process whereby Tarion determines whether a disputed item listed on a claim given to Tarion is covered by a warranty and whether repairs or compensation are required.

Condominium

Condominium (or condo) refers to a form of property ownership whereby unit owners own their individual unit and share in the ownership and expenses of the common elements. Condominiums are self-governing communities with by-laws and rules to guide their operation and business affairs. A condominium may be any kind of housing, including high-rise or low-rise apartments, a townhouse or stacked townhouse, or a detached or semi-detached house.

Construction performance guidelines

A set of guidelines that give a detailed outline of how homes should perform within a warranty period. The guidelines are used to make decisions on whether an item is warrantable.

Deposit protection

A form of consumer protection that protects the deposit paid to a builder under an agreement of purchase and sale up to a maximum amount. In Ontario, Tarion protects deposits if a builder goes bankrupt, if a builder fundamentally breaches the agreement of purchase and sale or if a purchaser has a statutory right to treat the Agreement of Purchase and Sale as terminated. Deposits are protected up to a maximum of $20 000 for condominium units and $40 000 for other new homes.

Facilitation

Facilitation is a form of dispute resolution whereby an individual, the facilitator, assists parties in finding a mutual resolution.

Financial services commission of Ontario (FSCO)

The Financial Services Commission of Ontario (FSCO) is a government agency that currently regulates the insurance sector; pension plans; loan and trust companies; credit unions and caisses populaires; the mortgage brokering sector; co-operative corporations in Ontario; and service providers who invoice auto insurers for statutory accident benefits claims. FSCO is accountable to the Minister of Finance.

Home

A home, for the warranty purposes identified in the Ontario New Home Warranties Plan Act, is a self-contained one-family dwelling, detached or attached by a common wall; a building composed of more than one and not more than two self-contained, one-family dwellings under one ownership; a condominium dwelling unit, including the common elements; and any other dwelling as prescribed in the regulations. Temporary dwellings, such as rental properties or seasonal properties, are not considered a home for the purposes of the Ontario New Home Warranties Plan Act.

Illegal building

The Ontario New Home Warranties Plan Act requires all new home builders to register with Tarion. If a builder enters into an agreement of purchase and sale or a construction contract with a purchaser without being registered, the construction is considered illegal building. 

Insurance Act

The Insurance Act governs the insurance industry in Ontario. Among other things, it sets out requirements and processes for the Insurance Ombudsman and licensed insurance businesses.

Major structural defect

A defect in work or materials that results in failure of a structural load-bearing element of a building or that materially and adversely affects the ability of a structural load-bearing element of the building to carry, bear and resist applicable structural loads for the usual and ordinary service life of the element, or a defect in work and material that materially and adversely affects the use of a significant portion of the home for usual and ordinary purposes having regard to any specific provisions in the agreement of purchase and sale.

Ontario building code

The Building Code is a regulation under the Building Code Act, 1992, and is administered by the Ministry of Municipal Affairs. The Building Code regulates new construction (including renovation) including fire safety, accessibility, energy efficiency, and other building systems. Municipalities and other principal authorities enforce the Building Code through reviewing and issuing building permits and inspections during construction by local building officials.

Owner builder

An owner builder is someone who builds a home intended for their personal use either directly or by hiring someone to build the home for them and exercises significant control over the construction. In Ontario, owner builders are not required to register with Tarion and the home is not covered by the Ontario New Home Warranties Plan Act.

Predelivery inspection (PDI)

A mandatory inspection of a new home by the builder and the purchaser, done before the purchaser takes possession of the home. Builders must provide purchasers with a Homeowner Information Package on or before the predelivery inspection. During this inspection, purchasers can ask their builder about the home and identify possible defects. The builder is required to fill out a PDI form and record any defects, and provide copies of the form to Tarion and the purchaser.

Regulations

Regulations are laws that set out detailed rules, based on what is in a statute. Usually the authority to make regulations is given to the Lieutenant Governor in Council or a government Minister. 

Safety and Consumer Statutes Administration Act (SCSAA)

Under SCSAA, an organization can be designated as a delegated administrative authority (DAA) with responsibility to administer the legislation in a regulated sector. Accountability, transparency and oversight rules are as provided for under the SCSAA and it requires that an agreement be in place between the proposed administrative authority and government before it can be designated under SCSAA. Where there is a need for different accountability, transparency or oversight rules for a given sector, the approach is to set out those rules in the governing statute rather than by designation under SCSAA.

Security

A builder may be required to give security to Tarion to protect the guarantee fund should the builder fail to meet their warranty obligations. Tarion can use the security to mitigate losses. Different builders may be required to provide different forms of security and in different amounts, based on several risk factors including what they are proposing to build and their financial information.

Tarion Warranty Corporation

Tarion is an independent, not-for-profit corporation with responsibility for administering the Ontario New Home Warranties Plan and regulating new home builders and vendors.

Vendor

Vendor is identified in the Ontario New Home Warranties Plan Act as a person who, on the person’s own behalf, sells a home not previously occupied to an owner and includes a builder, who acts as such under a contract with the owner.

Warranty

A warranty is a guarantee that something will perform as promised or as required. The Ontario New Home Warranties Plan Act provides that every vendor warrants to a new home owner that their home is: constructed in a workmanlike manner and is free from defects in material, is fit for habitation, is constructed in accordance with the Ontario Building Code and is free of major structural defects.